1. Don’t throw the baby out with the bathwater: Better regulation of capitalism is needed. Rather than banishing the innovations that spark booms, the challenge for regulatory reformers is to figure out how to use them wisely.
2. A global economy needs global rules and strict enforcement of them: Global economic institutions such as the International Monetary Fund failed to do their job because they were too weak and pursued the wrong policies.
3. We have to stop driving blind: The current crisis has revealed that much of the data we relied on as evidence of economic progress was downright wrong. Shirt-term profits were not an indicator of long-term value creation.
4. Don’t accept the “Nuremberg Excuse”: Just because a company provides incentives to do what you believe is the wrong thing (e.g. selling sub-prime mortgages to those who could never pay them back) and your boss says it’s “OK, because if we don’t do it the competition will” is not an acceptable justification.
I agree with Bishop and Green’s concluding paragraph and especially with the final sentence. “The last time we faced a crisis of this magnitude, in the Great Depression, President Franklin Delano Roosevelt used his inauguration speech in 1933 to warn that ‘the only thing we have to fear is fear itself.’ He was right. If we succumb to fear, the road ahead will be long and miserable. More than anything, whether we are able to once again set free our animal spirits and believe in our ability to create a better world will determine how quickly, or indeed whether, we can bet back on the road to prosperity.”
McNair’s concept “The Wheel of Retailing” is one of his most valuable contributions. In essence, it suggests that there is a pattern or process, a lifecycle of retailing, that moves from an entry position with low prices to gain market share to eventually moving upscale with higher-quality products aimed at more affluent consumers. Japanese automobile manufacturers, for example, proceeded through this cycle after entering the U.S. market with inexpensive vehicles that captured market share and then gradually moved upscale with higher-priced vehicles (e.g. Acura, Infiniti, and Lexus) that offered higher margins to the manufacturers.
As McNair once explained, “It seems to me that there is more or less a definite cycle in American distribution…The cycle frequently begins with the bold new concept, the innovation. Somebody gets a bright new idea…[and] attracts the public on the basis of the [low] price appeal.” Over time, the retailer trades up, improves the quality of his merchandise, improves the appearance and standing of his store, attains greater respectability. Meanwhile, capital investment and operating expenses increase. “Now the once upstart has entered the mature mode of retailing. Rapid, often imprudent growth results in “top-heaviness, too great conservatism, a decline in the size of return on investment, and eventually vulnerability [to] the next fellow who has a bright idea and who starts his business on a low-cost basis, slipping in under the umbrella that the old-line institutions have hoisted.”
Keep in mind that these are a few of McNair’s comments about a business world he surveyed more than 50 years ago. The cycle continues today, suggesting that the best time to make a change is when you don’t have to. Although no one denies that, few abide by it.
Regina Herzlinger received her Bachelor’s Degree from MIT and then her Doctorate from the Harvard Business School where she is the Nancy R. McPherson Professor of Business Administration Chair. She was the first woman to be tenured and chaired at Harvard Business School and the first to serve on a number of corporate boards. She is widely recognized for her innovative research in health care, including her early predictions of the unraveling of managed care and the rise of “consumer-driven health care” and “health care focused factories,” two terms that she coined. Money magazine has dubbed her the “Godmother” of consumer-driven health care. Her published works include Consumer-Driven Health Care: Implications for Providers, Payers, and Policymakers (2004) and Who Killed Health Care? America’s $2 Trillion Medical Problem – and the Consumer-Driven Cure (2007). Modern Healthcare magazine’s readers selected her as one of 2003’s, 2004′s, and 2005’s “100 Most Powerful People in Healthcare.” Managed Healthcare magazine named her as one of health care’s top “Top Ten Thinkers.
Note: I conducted this interview a few years ago for the KL&TG magazine, published by Dallas-based Thomas Group.
Morris: Before we discuss Consumer-Driven Health Care, I’d like to ask a few general questions. “Consumer control” is certainly not a new concept but only in recent years has it had significant impact. In education, for example, when students are asked to evaluate their instructors. You strongly advocate comparable accountability in health care.
Herzlinger: That is why we have so many problems in health care. Consumers have not been in control. Until now, insurers and governments have been in charge. A great deal has been said about the importance of “listening to customers” but, insofar as health care is concerned, insurance companies and governmental entities really haven’t done that. Who is holding them accountable for all the problems in healthcare, especially costs to consumers and to those who employ them? Who?
Morris: From my perspective, “consumer-driven health care” and “quality-driven health care” are synonymous. Do you agree?
Herzlinger: Consumer-driven health care will inevitably lead to higher quality and lower costs, just as what has already occurred in the consumer-driven automobile, computer, and cell phone industries. Competition is the foundation of the free enterprise system. The more competition there is, which is to say the more choices consumers have, the lower prices tend to be…and usually in combination with higher quality. However, consumers must make a greater effort to understand the choices they have now, and insist on having more and better choices. Whether or not health care providers and employers do a better job of helping consumers to do precisely that remains to be seen.
Morris: “What’s in it for me?” is a frequently asked question and, more often than not, a fair one. With regard to consumer-driven health care specifically, “what’s in it” for providers, payers, and policymakers?
Herzlinger: For providers, freedom from micromanaging insurers, as in managed care and governments. For payers, new, lower-cost plans that can help to reach the uninsured, a vast market. For policymakers, new legislation to enable purchase of health insurance on a pre-tax basis and for an SEC-like transparency agency. Here’s a key point. In the absence of consumer input, costs can run rampant, while consumers cannot obtain the health care they want. No wonder the productivity of health services has declined over the past two decades. Health care will not improve until consumers drive it. Period.
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To read the complete interview, please click here.
It had to happen. And Slate.com has done it. Peyton Manning is truly exhibit A of the 10,000 hour rule. And who wouldn’t think of him?
First, a reminder. Malcolm Gladwell (borrowing the idea from Dr. Ericsson), popularized the finding that it takes 10,000 hours to get really good at something. And his book, Outliers, is filled with examples, Bill Gates and the Beatles notable among them. (It also has to do with the age at which a person starts playing a sport, and the birthdate of the kid dictating when he/she starts). It is a fascinating concept, one of those “blinding flash of the fricking obvious” concepts. Well, of course, this makes sense. People who work the hardest, and the longest, at something are going to be better at it than those who do not work as long or as hard…
So – here is Stefan Fatsis (a “sports voice” I know and love through NPR) writing Peyton Manning Is a Genius: The Super Bowl quarterback is also a huge pain in the ass. The very title of the article sounds just like Fatsis.
The article describes how Manning can be a pain, a hard guy to like, but not a hard guy to respect. He simply works his way into the respect column of friend and foe alike. (I heard that on the flight to the Pro Bowl, he spent the entire flight watching video of the Saints defense).
He apparently started all this by at least the 6th grade. And here’s the best quote from the article:
“He lives, eats, breathes, smokes, snorts, chews football,” says Adam Meadows, a starter on the Colts’ offensive line during Manning’s first five pro seasons. “He’s just a machine. That’s all he wants to do.
Now – here’s a question: why does the 10,000 hour rule lend itself so strongly to athletic illustrations of the rule? Maybe because we all know athletes, and we know that there are so few truly great ones, and so many mediocre ones. When one rises to the top of the top, as in the case of Manning, we are rightly wowed. (Even if we think they are borderline, or not so borderline, unbalanced).
For those mere mortals among us, the 10,000 hour rule always seems so abstract. I don’t have video to watch of my opponent… I don’t have training camp… I don’t have the week-after-week test of a game…
So, here is the question that we all have to ask: “what do I care about enough to invest my heart, my soul, my energy into getting really, really good at it? (What am I willing to eat, smoke, snort and chew…?)
With Manning it is football. What is it with you?